Monday, July 22, 2024

Shorter payment delays are reported in China

Coface’ survey shows that fewer firms encountered payment delays in 2022. 40% of respondents reported overdue, down from 53% in 2021. The average payment delay was shortened from 86 to 83 days in 2022.

Fewer companies faced ultra-long payment delays (ULPDs).

Chemicals appeared the most vulnerable sector: 34% of respondents are reporting ULPDs exceeding 10% of turnover. The wood sector sees a similar trend with an increase from 0% in 2021 to 20% in 2022.

 

The pandemic – and subsequent lockdowns – was the top factor affecting businesses in 2022. As the Chinese government turned away from its zero-Covid policy, the share of respondents expecting an improvement in sales and cash flow increased, indicating optimism about China’s business operating environment in 2023.

Coface expects China’s GDP growth to accelerate to between 4% and 5% in 2023.

Bernard Aw, Chief Economist for Asia Pacific at Coface, said:“Despite businesses facing an economic slowdown in 2022 due to the Omicron wave and the subsequent strict lockdown response, credit terms lengthened during the year. Chinese businesses had to be more flexible as their customers needed more time to make payments amid tight liquidity and mobility restrictions that disrupted payment processes. The average payment terms increased from 77 days in 2021 to 81 days in 2022.With companies offering longer payment terms, fewer reported payment delays in 2022: the share of respondents reporting overdue fell from 53% in 2021 to 40%, the smallest share in the past five years.Looking ahead, respondents were increasingly optimistic about economic prospects in the next 12 months as the Chinese government transited away from its zero-Covid policy at the end of 2022. The share of respondents expecting higher economic growth rose from 68% in 2021 to 84%.”

Payment delays1: Increased funding risk for chemicals and wood,…

Read the complete story on Thailand Business PrNews

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